Wells Fargo: Financial Winners and Losers
(
Updated with final stock price moves
.)
NEW YORK (
) --
Wells Fargo
(WFC) - Get Report
was among the losers of the financial sector Friday after a bank analyst argued that the gap between management views of the company and shareholders may be growing.
Wells Fargo shares were down 29 cents, or 1%, to close at $28.49 after Rochdale Securities analyst Dick Bove wrote in a research note that, while the bank's management is pleased with the company's performance, outsiders believe Wells Fargo is understating its loan problems in the home equity, commercial real estate, and credit card arenas and that there are significant issues related to the valuation techniques it applies to its derivatives portfolio.
While those outsiders see a volcano about to explode, Bove notes that Wells Fargo's management believes the company is growing its deposits at a high rate and that it is generating enough capital to meet requirements. He also said the bank claims to be lending money at a fast pace, and that its nonperforming loans are under control.
"In sum, management is convinced that it has produced a consistent high return on its businesses benefiting shareholders," Bove wrote. "Yet the tremors in the volcano keep rising; not subsiding."
Among other bank news,
Citigroup
(C) - Get Report
also finished lower a day after
, when asked whether a $100 million annual pay package was too much, told an audience in New York it was.
The question of excessive pay referred to Andrew Hall, the head of Citi's oil trading unit Phibro, who received $98.9 million in 2008, according to
The Wall Street Journal
. On Thursday, Pandit said that Citi wants to reduce its ownership in Phibro and have the unit manage money from outside investors,
The Financial Times
reported. Phibro currently trades with capital from Citigroup.
Citigroup shares gave back early gains to finish lower by 16 cents, or 3.6%, to $4.26. Other bank stocks retraced early winnings, with
Bank of America
(BAC) - Get Report
ending down 0.2% to $17.58 and
JPMorgan Chase
(JPM) - Get Report
falling fractionally to $44.95.
Morgan Stanley
(MS) - Get Report
ended up 1.1% to $31.38 and
Goldman Sachs
(GS) - Get Report
climbed 1% to $183.28, although both pared gains into Friday's close.
On the analyst front, FBR Capital Markets analyst Paul Miller said the recent capital raise by
Synovus Financial
(SNV) - Get Report
buys the company some time, but that he would like to see a further boost to its capital levels.
On Thursday, Synovus disclosed its pricing of a public offering of 150 million shares at $4 a share. Miller reiterated a market perform rating on the stock and $3 price target, but lowered 2009 and 2010 earnings-per-share loss estimates in the wake of the news.
"In our view, the capital raise helps to buy Synovus time, but we believe losses in the construction and development and commercial portfolios will erode capital significantly over the next several quarters," Miller wrote. " However, we expect
net charge-offs to remain elevated in the 5% range for the next several quarters."
FBR Capital also initiated coverage of
Lincoln National
(LNC) - Get Report
with an outperform rating and a price target of $35.
Synovus finished a penny higher at $3.91. Lincoln National, on the other hand, fell 11 cents, or 0.4%, to $26.31.
In other analyst moves, RBC Capital, FBR Capital and Keefe, Bruyette and Woods all increased their stock price targets for
Discover Financial
(DFS) - Get Report
, a day after the credit-card issuer reported third-quarter earnings. Discover shares closed up 54 cents, or 3.5%, to $16.06.
(HBAN) - Get Report
was among the losers of the day, sliding 3.6% to $4.35 after it said it priced a public stock offering of 95.2 million shares at $4.20 per share.
Elsewhere,
Reuters
reported that U.S. clients of
UBS
(UBS) - Get Report
been warned by the bank that their undeclared income in Switzerland may be revealed to U.S. tax authorities. In a letter obtained by
Reuters
, the Swiss bank told account holders it may ultimately submit account documents to the U.S. Internal Revenue Service and that they may lose access to a voluntary disclosure program.
A separate
Bloomberg
report said that a U.S. amnesty program spurred by the
with U.S. authorities, which is set to end Sept. 23, has prompted a flood of disclosures by customers of
Credit Suisse
(CS) - Get Report
and
HSBC
(HBC)
, among others. The program allows individuals to pay back taxes, a reduced fine and avoid criminal prosecution.
-- Written by Robert Holmes in New York
.
